Efficiency measurement of a Malaysian hotel chain using DEA

Efficiency evaluation has become an important improvement tool for hotels to sustain in today’s highly competitive environment. This study used DEA approach to evaluate the relative efficiency of a Malaysian hotel chain during the period of 2004 to 2008 in terms of Total Factor Productivity (TFP) change. TFP change is measured using DEA-Malmquist productivity index. DEA is a pragmatic tool which combines multiple inputs and outputs objectively onto an overall measure of organizational efficiency. The Malmquist TFP index measures are decomposed into technical efficiency change and technological change. The decomposition of technical efficiency change into two sub-components, pure technical efficiency change, and scale efficiency change is also discussed in this paper. The actual operating data of five inputs and five outputs were collected from 10 hotels under the chain. Empirical results revealed that the TFP of the hotel chain slightly increased by 0.7% over the time period. Six of the hotels in the chain experienced positive TFP change while the others experienced TFP decline. The quadrant of efficiency was proposed to give a two-dimensional view of the hotel efficiency. Meanwhile, technological change was found to be more important factor of TFP growth as compared to technical efficiency change. Therefore, hotels which faced negative growths of technological change are recommended to improve their efficiency through investment in new technology or by upgrading the necessary skills. Additionally, the paper has also identified the best performing hotel within the chain which can be benchmarked by others who are seeking for performance improvemen

Efficiency in the hotel industry: an empirical examination of the most influential factors

The purpose of this article is to provide insights into hotel efficiency and investigate which hotels are performing better. Hotel efficiency is examined using data envelopment analysis (DEA) and the outputoriented BCC model is applied on the hotels’ internal accounting information. The study further explores whether there are differences in efficiency between hotels of different size and quality. The results show that average efficiency is high, but not all hotels are performing at their maximum efficiency. A significant relationship between size and hotel efficiency has been found. This study provides a potential framework for efficiency measurement and contributes to the growing body of knowledge in the area of hotel efficiency in the context of a country that is predominantly concentrated on seasonal seaside tourism. The results of this research offer useful insights for hotel managers, suggest ways of enhancing hotel productivity and provide guidance on which aspects to focus their attention in the decision-making process

Tourism productivity: incentives and obstacles to fostering growth

This paper intends firstly to estimate tourism productivity in 208 countries in the years 1990, 1995, 2000 and 2004. Secondly, it analyzes if the differential of productivity across countries could be due to some structural characteristics of the countries themselves. The study uses a stochastic production frontier approach and a technical efficiency model to analyze the determinants of efficiency across countries. Private capital and labour result to be more influential than public capital on the number of arrivals. The results suggest that the tertiary school enrolment, the level of communication technologies, the country openness to international trade all significantly contribute to efficiency.Tourism productivity; Economic growth; Labor; Public capital; Private capital

Evaluando el progreso de la eficiencia con tecnología en una cadena de hoteles española

This paper analyzes the changes in the total factor productivity index of a Spanish hotel chain in the period from 2007 to 2010 with the purpose of identifying efficiency patterns for the chain in a period of financial crisis. The data envelopment analysis (DEA) Malmquist productivity index was used to estimate productivity change in 38 hotels of the AC chain. Results reveal AC hotels’ efficiency trends and, therefore, their competitiveness in the recession period; they also show the changes experienced in these hotels’ total productivity and its components: technological and efficiency changes. Positive efficiency changes were due to positive technical efficiency rather than technological efficiency. The recession period certainly influenced the performance of AC Hotels, which focused on organizational changes rather than investing in technology.Este artigo analisa as mudanças no fator total de produtividade de uma cadeia de hotéis na Espanha, no período de 2007-2010, com o propósito de identificar os padrões da cadeia em um período de crise financeira. O índice data envelopment analysis (DEA) Malmquist de produtividade foi usado para estimar a mudança da produtividade nos 38 hotéis da AC Cadeia de Hotéis. Os resultados revelaram as tendências de eficiência e competitividade da AC Hotéis em um período de recessão, bem como as mudanças vivenciadas na produtividade total e, consequentemente, em seus componentes de eficiência e tecnológicos. O período de recessão influenciou, sem dúvida, o comportamento da AC Hotéis, que buscou mais mudanças organizacionais do que tecnológicas.Este artículo analiza los cambios del índice de productividad del factor total de una cadena de hoteles españoles en el periodo de 2007 hasta 2010, con el propósito de identificar patrones de eficiencia para la cadena en un periodo de crisis financiera. El índice de productividad data envelopment analysis (DEA) Malmquist fue utilizado para estimar el cambio de productividad en 38 hoteles de la cadena AC. Los resultados revelan las tendencias de la eficiencia de los hoteles AC y, por lo tanto, su competitividad en el periodo de recisión; ellos también demuestran los cambios experimentados en la productividad total de eses hoteles y sus componentes: cambios de eficiencia y tecnológicos. Cambios de eficiencia positivos se debieron más bien a eficiencias técnicas positivas que a eficiencias tecnológicas. El periodo de recesión ciertamente ha influenciado los Hoteles AC, que enfocaron más en los cambios organizacionales que en invirtiendo en tecnología

Measuring efficiency of the youth hostel sector in Andalusia using an adapted DEA model

Este estudio mide la eficiencia del sector de los Albergues Juveniles de Andalucía mediante la realización de un Análisis Envolvente de Datos (DEA). Los datos sobre la eficiencia en la gestión han sido recogidos en todos los albergues juveniles públicos de Andalucía para el período comprendido entre 2003 y 2012. Los resultados revelan que existen diferencias significativas en la eficiencia entre los diferentes centros. Esperamos que este estudio empírico pueda proporcionar información útil para una mejora futura de la gestión en este sector.This study measures the efficiency of the Youth Hostel sector in Andalusia by carrying out Data Envelopment Analysis (DEA). Management efficiency data has been gathered on all Andalusian Public Youth Hostels from 2003 to 2012. The results reveal that there are significant differences in efficiency. It is expected that the empirical study can provide useful information for future managerial improvement in this sector

A DEA Approach for Evaluating the Labor Efficiency in the Rural Hotel Industry: A Case Study in Spain

In this paper, labor efficiency in the rural hotel industry is analyzed while considering the characteristics regarding labor and infrastructure of the various Spanish provinces. The methodological procedure consisted of the analysis of 52 Spanish provinces. As analysis, Data Envelopment Analysis (DEA) and Multivariate Analysis have been used. Although rural tourism is consolidated in the Spanish holiday culture, the effect of labor efficiency on Spanish provinces is uneven. Performance depends on the geographical area; thus, labor efficiency is only achieved in Asturias and Balearic Islands, where rural tourism has a strong and positive impact on employment. The variable length of stay of the holiday period carries important weight for labor efficiency to be reached in said provinces. It can be observed that hotels located in places with charm and with special environmental protection contribute directly to the labor efficiency of the area due to the direct relationship between the area of protected land and the labor efficiency of the province. Several provincial groups are established with a variety of different characteristics, which confirms that the level of labor efficiency in the sector has yet to be maximized

El impacto del COVID-19 en la eficiencia hotelera en España: el caso de Barcelona

Purpose: The purpose of the study is to attempt to fill the gap in extant literature by evaluating a hotel’s performance in terms of efficiency before and during COVID-19 and provide a performance measurement knowledge of both stable and turbulent environments. Design/methodology/approach: The sample consists of 20 Hotels: 3-star and 4-star operating in Barcelona, Spain. This study uses data envelopment analysis (DEA) to analyse the efficiency of those Hotels between 2012 and 2021. The analysis includes five input variables: (X1) Current Assets; (X2) Non-Current (Fixed) Assets; (X3) Shareholders’ equity; (X4) Cost of employees; (X5) Material Costs and one output variable: (Y) Operating revenue. Findings: The results of DEA efficiency analysis showed that hotels belonging to 3-star hotels are more inefficient than to 4-Star hotels starting from 2013. While observing each inefficient hotel’s performance during the 10-year period and comparing the level of inefficiency of inefficient hotels before and during the COVID-19, it became clear that the pandemic had a negative impact on all of them. We can also notice that during COVID-19 we have more 3-star hotels being inefficient and having a high level of inefficiency than 4 stars hotels. The lambda analysis showed that during 10-year period more 3-star hotels were identified as principal models to follow than 4-star hotels. Finally, the slack analysis revealed that inefficient 3-star hotels have to make adjustments in more resources such as Current Assets, Non-Current (Fixed) Assets and Shareholder’s Equity than 4-star hotels where they have to reduce resources such as Cost of Employees and Material Costs. All the hotels included in the sample have to increase their Operating revenue. Research limitations/future research: This study have two main limitations: available data limitations in terms of variables and available years and limitations applicable to the method used. Regarding to future research, one direction would be to evaluate a hotel’s performance in terms of efficiency and effectiveness since this study examines the performance of hotels from the efficiency’s point of view. Another direction could be to expand the number of input and output variables and be extended for larger sample of hotels located not only in Spain but also in other popular tourism destinations for the same purposes. Finally, to analyse hotel performance after COVID-19 will help to understand the resiliency and recovery speed of hotels after pandemia. Practical implications: The results obtained through DEA provide implications and potential strategies to hotel owners and managers that could be adopted in order to improve the efficiency of their business and operations. The results of the study can also provide some important insights and guide future investors such as that inefficiency is more prevalent among 3 star hotels than 4 star hotels and that during unexpected situations such as COVID-19 the level of inefficiency is higher in 3-star hotels than in 4-star hotels. Originality/value: This is the first study analysing hotel efficiency before and during COVID-19, demonstrating how hotels’ performance changes over time, especially during unexpected or unpredictable situations and whether COVID-19 affected the efficiency of hotel enterprises. Moreover, it identifies the sources of inefficiency of hotels and gives recommendations, at the level of strategic and operational management, so as to increase hotel efficiency. The recommendations can be helpful and applicable for other Hotels with similar characteristics in different tourism destinations

IT vs. Marketing: Efficiency and Effectiveness Evaluation

Owing to budget constraints, managers should balance the expenditure requirement of IT and marketing department. This paper offers a new method to evaluate the importance of IT department and marketing department. It introduces the triangular three-stage DEA model to measure the expenditure efficiency and effectiveness. Using the data of the hotel industry of Macao, it shows that IT and marketing effectiveness is both positively correlated to productivity while efficiency is not significantly correlated to effectiveness. That means hotel managers need to more carefully and proactively examine the related budgets to be allocated to IT and marketing. The correlation coefficient of marketing effectiveness (coefficient=0.44) is higher than that of IT effectiveness (coefficient=0.41), which shows that in the sample period marketing expenses are somewhat a little more contributive to the business value than IT. This new way can be a reference for managers to set up the budget

The Operational Efficiency and Sustainability of Selected De Luxe Class Hotels in Metro Manila

For a hotel to survive, it must consistently perform at its most fluid efficiency. Inefficient performance means wastes in the use of hotel inputs that is detrimental in maintaining low operating expenses to sustain survival in the hotel industry. This paper aims to determine the sources of efficiency and sustainability performance of 10 De Luxe Class Hotels in Metro Manila, Philippines accredited by the Department of Tourism from 2005- 2014. The efficiency and productivity of the sample were assessed using slack-based and Malmquist productivity index models of the Data Envelopment Analysis (DEA). The results indicated that an average deluxe hotel was productive and cost efficient. However, technology was obsolete and could cause the downtrend in revenue or tourist visit. It also hinted decreasing returns to scale. Slacks revealed that an average deluxe hotel should reduce its inputs (operating expenses, capital, employees and rooms) wastages to catch up with Pan Pacific Hotel Manila. Regression analysis proved that the De Luxe class hotels are operating at decreasing return to scale. It also reveals that older hotels were not efficient than younger (newly established) hotels. Although not statistically significant, larger hotels were not efficient in their operation than their smaller counterparts. Overall, the De Luxe class hotels’ operation is not sustainable.   Keywords: Hotels, DEA, SFA, Total factor productivity, efficiency, resource us

Managerial Efficiency in the Food and Beverage Industry in Taiwan

This study evaluates the managerial efficiency of food and beverage companies by employing the output-oriented data envelopment analysis (DEA) approach. Consequently, the input and output variables of ten Taiwanese listed food and beverage companies were collected from 2011 to 2014. Then the Mann-Whitney U test was used to examine the difference in efficiency between restaurant companies and beverage and dessert companies. The major findings are as follows: (1) An inverse relationship exists between the scale and managerial efficiencies of the food and beverage industry. (2) The Mann-Whitney U test shows that the beverage and dessert companies are statistically more efficient. The results not only offer different managerial insights into the food and beverage industry’s operating efficiency but also determine which factors have a significant and direct impact on these restaurants’ or beverage and dessert shops’ success or failure, which is the considerable contribution of this study for the service industry